Web3 and the Future of Banking

Transcript

okay perfect so guys last last talk today i hope you have still some energy i was thinking about making a joke on on celsius the whole day but it was too too hard to find one sorry sorry about that um i'm going to to talk about define the future of banking so potentially um so many of you are already experts so uh it might be it might be a little bit lightweight on some some edges but um kind of like the twist that that i give here is uh kind of given my background so i involve myself a little bit like at the let's say at the border between the the regulated world and the non-regulated world and trying to bring like as many ideas of the non-regulated world into the regulated world and uh so i i would just demystify what i'm doing

during this presentation so first who am i well so i kind of was a was a banker some some time ago actually i i'm a developer from for my courage and i started the development company out of university um then moved to berlin to join the company builder that one week after i joined decided to um start businesses in fintech yeah and you can imagine so when when i went to university anything around finance and so on was definitely not my my core strength uh so it was kind of an uphill battle for me to really get into this um but uh the good thing about the db being a developer is um you always try to understand the requirements first right and so if you're a good developer you

really try to really understand the requirements and then kind of like make suggestions how to build things better um and so when we were at this at this company builder uh it was called finn leap in germany and we decided to found the bank from the scratch and um so i had the opportunity to join solaris bank in germany as as a co-founder and cto and we kind of we ran for a banking license in germany and then also i built with my team the whole infrastructure to you to really run the bank and and so on so therefore i really know it from from from the in our heart uh end of 2016 got into um connection with the with the crypto scene mostly driven by the question hey if you can become your own bank so why

are we still running our business so why why are we stopping and doing something else um and uh kind of like the more i informed myself and read and try things out the more i really got caught by this um so therefore um really enthusiastic about also what these days are uh is done with with d5 um after solaris bank i joined person stuttgart and built up a regulated crypto exchange like running with a with a stock market license and now um for the for the last one years we we started ultimate and unstoppable finance and we want to bring defy to them to the masses um so first of all so why we're here um well the invention of the internet has been a big thing and it has been pretty

disruptional i think we all believe that um the invention of blockchain and uh kind of having having d5 having also like many web three projects is really like the the start of a new development of that kind and um so there was this there's this famous quote by anderson horowitz software's eating the world and now like 11 years later we've seen kind of amazon revolution revolutionized retail spotify the music industry and kind of like everything that we use became more digital faster cheaper and more usable and so on but there's just one industry that that kind of so from my perspective really didn't change at all right and it's the the financial

services and and banking industry and if we have a look at uh how does how this industry works um so first of all so to me um one really outstanding example for how how the financial service industry really is not fulfilling the customer's needs is when it comes for example to to real-time transactions i think every one of us is really used to getting whatsapp messages in real-time for more than 10 years already and kind of like almost any information that you want to get you can really gather in real time and and that's the that's the new normal uh when it comes to banking transactions um so when the euro was introduced um so i i know that i've just finished school and my parents bought me a book about the

euro the year 2000 and so i read it and even in this book there was already written kind of hey there will be the target system so that's now nowadays uh it's it's known with target two and zipper installed payments as a that i can do like uh cross-border transactions inside europe um in real time and uh we have now 2022 real-time transactions in in banking are not the default yet so there's many banks even charging you extra for that and so if you want to wire money somewhere so you're waiting like three days so that the transaction is really really settled so that's that's kind of that's the normal i think

this is an example so they had like 20 years to to bring that up yeah and it probably takes another 10 years so that that it's really uh accessible everywhere and um furthermore um so you you followed kind of like all the different um scandals and uh and uh problems that's that occurred kind of like in the banking industry so there was the wirecard scandal in germany um so which was a pretty pretty big thing um and like comex is also like like a german german-based uh scandal so where it's about uh kind of like committing or like avoiding um or getting tax repayments uh when doing them when doing stock market transactions and um kind of like an order like money laundering

activities of bigger banks where i don't know on a monthly basis there's police officers walking into deutsche bank and just like getting getting paper and leaving again so that's kind of how it is these days and um from my point of view so this um and this is kind of my also like my view on d5 so i really see defy as also as one of the solutions we need to to circumvent all these scandals in the future and uh yeah so that's coming coming later um so um when i when i when i talk to uh to people outside especially also outside of the crypto industry i'm always explaining so there have been two main waves in in the crypto industry so

first bitcoin was invented as a payment system like a decent last one so that people can send money around the globe without knowing the back-end infrastructure and really trusting trusting these transactions and um kind of in the first wave people somehow found out that these crypto assets were kind of like growing in price all the time right so if you follow back like 10 years so like and if you put like a like a uh put it at the scale so this like always goes up um so people started to trade it to speculate on crypto cryptocurrencies uh and so there's now like a big industry being developed around that so like decentralized exchanges um and uh people go there for for trading and and also kind of looking

towards like how much it really went to the masses um so there's like licenses in germany for example so for for crypto trading and there's like the mika regulation and so on so this kind of like almost went through the whole whole hype cycle tokenized assets and all these things and to me a d5 is kind of the second wave of the development and from my perspective it's really more about delivering financial services and and not like the next crypto asset that gets traded somewhere and i think this uh this separation is super important when talking to two people outside the industry because i think many people always feel distracted when when you say like hey you do something with crypto then they always like treat you like okay so you're a millionaire and whatever and it's all speculation and

bitcoin doesn't have a value and whatever then i would say like okay forget about bitcoin trading so it's now about building financial services so the stuff that you got from the bank back in the days so you can now get like from from like a decent infrastructure so like getting a loan investing money earning earning yield having asset managers and so on and i think then people start to realize okay so that's a completely different animal and uh they forget kind of about the first wave so what is d5 i think i don't need to go too deep into this you you all know um so what are the kind of like the points that i always point out when when talking to people outside the industry um and who are these people so i'm

talking to like a lot of journalists and we're currently doing media tours in germany to um to uh yeah talk to to to journalists and uh really discussing how is the is the perception of of crypto and other questions and um can we can we kind of like help to to create an understanding and also i'm part of the advisory board of the ministry of finance in germany um there's it's the same question so we meet quarterly and we can really put put crypto topics on the agenda and we always explain there hey so this is not about only trading so it's really about finding building financial service infrastructure and the cool thing

that i always explain about it is first of all it's global yeah so you always had kind of um financial jurisdictions for example the the euro region north america and like each asian country almost uh is regulated this uh like in a independent way uh and it's not interoperable that easily so you have the smith protocol but this also doesn't uh doesn't work that well um so now you have like a global infrastructure that is uh can be equally used by everyone so which which is a like a big big favor it's permissionless and interoperable so this like the example from from the old world is

for example the banking industry is working for the last 10 years on psd2 and open banking standards and also kind of access the bank account so that people can move their bank account from one bank to the other and they're talking 10 years about it they now have the first implementations and specifications but the product that results for the user is really dumb right so it doesn't feel good so the people are not using it but yeah so like the the challenge uh the kind of like the goal was achieved because if nobody's using it if nobody's changing their bank i think the bank banks have what they want right um so kind of defy and building financial service on the blockchain really is

it really is kind of like open banking built inside and people are using the money lagos are building decentralized value chains to deliver financial services and i think like the traditional finance industry would never get there and this the second thing it's really about about transparency and so first of all like each transaction gets gets recorded on the blockchain i think that's a that's a big big win so when really being transparent and following what's what's going on and who did who did what um also kind of um when it's about for example having an order trail so kind of what so did you really see like what what uh what that address uh interacted with with what protocol um but additionally and uh

so i i was invited to also give a speech at a at the bathroom conference five weeks ago and they asked me to talk about the future of regulation and i was saying that um that's a i was saying like software's eating the world so i also say software is eating the regulator in the future because if you build financial services with a smart contract and that smart contract could be for example audited before going live then once it's deployed it's very difficult to change and it's very difficult to manipulate and and in the end kind of the big caveat of the traditional banking and the financial service ecosystem is that there is still so much stuff done manually yeah so kind of in the

wirecard scandal so it was not a machine who manipulated something it was like people who wanted to whatever get get more money or have a benefit or have a benefit for somebody else so in the end in banks usually you have these crazy processes and documentations and for eye principle and uh controls on on each process segment and so on really where the banks try to avoid that this stuff happens but in the end so if there's like a like a human involved and humans are very creative you will always have manipulation so like wirecard two wirecard three wire cut four is going to happen and therefore i really see defy and building financial services in form

of a smart contract i really see this as a solution for a better financial service ecosystem in the future because it will solve the dilemma of the regulators where kind of after wirecard five potentially right next to every uh bank employee there will be a bathroom or like a regulator employee and watching what the person is doing all day um so in the end but there will still be manipulation right so like the humans will find a way um so like having having a fully automized and smart contract-based financial service ecosystem i think that's really the solution to to to a better world yes um so well i don't need to explain what what the default services are um

and in the end non-custodial wallets are kind of the the access gateway to to this world um so why are we at ensemble finals also so fascinated about this because we really believe that this is kind of the let's say the the uh the mate that the people are using kind of like their friends helping them to navigate a complex world um and uh we also believe that kind of like if there's like this safe haven in in this in this complex world so that where the people know like okay so i i know how this works um i i find all the interesting opportunities that i can use in there and so we believe it will be the non-custodial wallet step that people will use and and further more really going forward so so i was talking about defy a lot here

but there's also kind of like the bigger bigger topic around with with web3 um so people are starting to use to to hold all their data in there in their wallet to make like a login persona with with their wallet and um kind of use it whatever like 80 100 150 times every day because it's kind of their central central tool to to do almost everything digitally yeah and um so what's what's our mission with uh with ultimate so we want to bring d5 to the masses i think there's many people doing that sorry for having such a broad slogan here um but kind of like really delivering the mission is so we want to

make it super easy for for the users so we have uh the designer of trade republic also in our team and so we want to build a defy a mobile application that yes really appeals to to everyone and makes it makes it easy to invest into different protocols just with a few fingertips and furthermore we do protocol curation so we created a protocol creation framework that we also use and where we transparently write about like why we are using certain protocols um and that's kind of the help for the user to get a co-pilot ready to navigate this complex world the second thing is doing education by by communication probably many people of me have never of you have never heard about

me um so the reason is because i'm talking like a lot on events that are not crypto specific so kind of uh being like at uh yeah kind of like mainstream conferences and try to educate people in that space and the third thing is that um we really try to involve um also at the regulator's level so we had a lot of activity in the transfer of funds regulation to really avoid the worst things to happen also in mika so that we made sure that the d5 is not not included in there so we really we talked in the european parliament and so on and kind of we ramped up quite some resources to protect the industry from uh from bad regulation so final thoughts um to me um so as i'm

kind of coming from the old world and from the fintech world to me d5 is really fintech 2.0 because so back in the days when the first fintech company started they were saying like hey so we get rid of the banks and so we kind of like we take over and then they realized oh damn without a license and without infrastructure it's not possible um i think defy is something different because it's not only nice front ends on old technology it's really new front ends on new technology and new infrastructure and therefore the level of innovation is much bigger than fintech could ever be furthermore it scales almost unlimitedly so if you compare um for example new york stock exchange and uni swap kind of also what uh what

revenues per employee they do kind of running on top of a of a blockchain means that you really get a lot of stuff for free and therefore you can really focus on what you're building i think that's a big advantage um for for for these for these uh projects and um yeah all all in all um i'm i'm super enthusiastic about like all these benefits that i said kind of um being open premonitionless decentralized and uh very difficult to manipulate um i'm really sure that also with all the protocols that we've seen so far algorithmic stable coins and all the projects that we really have to the components in front of us to build the best financial service ecosystem that

yeah existed in human history and uh yeah so therefore we're building ultimate and uh yeah so i'm uh i'm here for for the next few days and if you want to discuss also kind of like what do politicians think and kind of what's the different opinions so i'm i'm really open to to discuss and also hear your thoughts and ideas because i think it's like the next the next 12 to 18 months will be really pivotal for the whole industry because um yes we really need to make sure that um that kind of the right arguments are delivered uh also to like ecb and european parliament and so on and yeah so we will really fight for for the industry here thanks

[Applause] thank you peter do we have some questions is everybody pooped out at the end of the day there we go hello i have a question so the target audience are retail investors right and one of the core problems that we have in crypto is the education around what people are actually investing in and if you are targeting retail

investors is ultimate basically also going to provide education around what is being invested in or is it just going to pre-select certain investments that people can do yeah that's a very good question and um so we discussed about that also a lot internally and and that's kind of so what does it mean kind of like to bring defy to the masses so from in our perspective it's not one step that's going to happen because at the moment it's like still like quite in the niche so like a few million people worldwide who are very enthusiastic about it who also know a lot of the technology behind it and therefore they're able to to use it and kind of like until it arrives at

the cab driver or at the teacher um there will be a lot of steps in between and from from our perspective it really starts with kind of like with the with the core crypto community then kind of it will be like the the people who maybe um bought some cryptocurrencies already but did not look into the defy space yet and that's a lot of people even like a lot of people who are working in these companies who are just like very busy just like building c5 business and and kind of around running the whole show and then there's like the fintech people there's like the startup people there's maybe then like the broader banking people and so on and that's kind of how we see the thing so kind of like starting with the with the next two kind of like next generations of crypto users

and defer users and then expand over time because really explaining to kind of somebody who's not technical not in crypto uh didn't get like the the concept of blockchain and so on it's so where do you start with the education there so that's uh that's that's so difficult and therefore we do this in stages thank you hi thanks for your talk um i think my question is about sustainable sources of yield because i think right now d5

generates yield from largely speculative finance right which is i mean more power to you but do you think that real-world assets are going to become key to the to generating sustainable sources of revenue and yield ultimately right for d5 protocols yeah that's also that's also a good question so for for us kind of the still the like the core the core business model for for crypto still is trading so kind of um so what would we take care for is to build an application to really help the user to find like all these these core use cases so first of all so they open the wallet so that's kind of like where it starts then they they can uh can trade on a on a dex and so that's that's that's one thing we rebuild inside and at the

moment we offer um liquid staking and um and option vaults um but kind of like also very selected so it's not like the broad list of everything and kind of like where the user really loses herself kind of like i don't know too many options and too many things you don't understand and then you cut off and and you let it go and so it's in the end really built in in a way that it's more feels like a whatever like a like a robo advisor yeah so that you just like you have one option um so we we selected that wisely and also we really try to find direct the right trade-off between uh kind of like the risk but that's also like implied in the d5 service and in the investment and on the other side um

also kind of still being attractive because um yeah so many many people in the d5 space are really hunting for like the the big apys and switching switching a lot and that's probably also not our core target group so kind of like we're looking for the people who say like okay hey i don't want to do this the whole day so i have another job for that to do so just like having an autopilot clicking a few times and then you're invested thank you any other questions okay thank you again peter and enjoy your evening everyone thanks for coming you